You can back into it.
Ultimately, in most SaaS models, in the U.S., sales reps will take home about 20% of the total deal value they close.
In the early days, especially if the company is venture-backed, it might be more, as much as 30% or even a smidge higher with accelerators, etc. VC dollars are there to accelerate growth, and if paying a bit more to the sales reps helps there, that can often be worth it.
The numbers are often a smidge higher with SMB sales too. In many cases, reps just can’t close quite as much revenue with SMBs, and if the reps are in higher expense locations, that can force you to pay more than 20%. (Even for SMBs, you still eventually need to approach 20%. That often means moving sales to a lower-cost center).
At least at scale, to make the business economics work, an AE can’t make too much more than 20% of what she closes.
Now how much can an AE close in SaaS?
- the average AE for mid-market SaaS might close $600k-$700k a year.
- the average AE for bigger deals might close $750k-$1m a year; and
- the average AE for small deals might close $300k-$500k a year.
So if you are on quota, that would lead to anywhere from $60k-$140k-$200k a year in those categories of AE.
But that’s for a rep on quota. A good rep, but not a top rep.
Top reps often close 2x-3x more than a mid-pack rep. Sometimes, even a little more. The delta is material at the very, very top of the pack.
So the very, very top reps can make maybe $180k-$200k for SMB sales, and up to $1m for enterprise / big sales. The top reps.
That close a lot more than the reps just one standard deviation away.
You can see this when you visit a SaaS company doing enterprise sales crossing say $50m+ ARR or so. That’s usually when the first rep has a $1m year. Someone really figures it out, and say closes $4m+ in big deals. 25% x $4m = $1m.
Everyone gets excited. That’s a lot of money.
But only 1 or 2 can really operate at this level for every $100m in bookings.
More here -> MoreSaaStr.com
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Jason Lemkin, Khareem Sudlow
